IGI Logo

Leadership position in the key brands & consistent innovations to drive the growth: ZWL is an undisputed market leader in various niche categories such as sugar-substitutes (Sugar Free–93.0%), scrubs (Everyuth–35.8%), peel-offs (Everyuth– 77.0%), glucose powder (Glucon–D, 58.4%), prickly heat powder (Nycil–35.4%); 11 new products were launched during FY21.

Widening geographical presence & share of overseas businesses: ZWL has planned to enter new markets with relevant offerings as part of expanding its geographical footprint. The strategy is to build scale in international business by focusing on South Asian Association for Regional Cooperation (SAARC) countries, the Middle East & Africa region & Southeast Asia region.

Deepening supply chain network into rural & semi rural areas to drive the sales; e-commerce to play a vital role as well: Under the Project Vistaar, the company had targeted to double its direct distribution to 5 lakh outlets and ended up at 5,50,000 outlets by Q4 FY21. In addition, the company also has direct access to nearly three-fourth of the chemist stores in the country. Moreover, during FY21, the e-commerce grew by >250% accounting for almost 3.6% of the domestic revenue.

Synergies from absorption of Heinz acquisition to improve profitability: The Management has repetitively retained their stand that the operating leverage arising out of the synergies of the acquisition will lead to improvement in profitability. Leaner balance sheet and robust fundamentals to fetch higher valuations: During FY21, the company redeemed Rs.1,500 cr worth of Non-Convertible-Debentures through the Rs.1,000 cr raised and borrowed the remaining at much cheaper rate.

OUTLOOK & VALUATION

ZWL (a part of Zydus Cadila group) commands the leading position in 4 of the 6 product categories it is present through its offerings Sugarfree, Everyuth Peels & Scrubs, Glucon-D & Nycil. Sugar Free, the flagship product of the company leads the segment with over 90% market share. Following the acquisition of Heinz India, the product portfolio has widened and addressable market has grown multifold. The products are passed through a robust supply chain network across the country.

The Management is focusing on driving the volumes through new product launches, widening geographical presence and deepening rural presence. Going forward, we expect the company to deliver an EPS of Rs.67.5 in FY23; assigning a target multiple of 40x we arrive at a target price of Rs.2,700 showcasing an upside potential of ~30% from current levels with an investment horizon of 18-24 months.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.sushilfinance.com/Disclamier/disclaimer
Member : BSE/ NSE/ MSEI. SEBI Registration No.-INZ000165135.
 

Above views are of the author and not of the website kindly read disclaimer